On July 26,
Inner City Press attended the NYS Public Service Commissions public hearing on the
proposed mergers of Verizon and MCI, and SBC and AT&T.ICP came with testimony (which is below).But what was surprising was that those testifying were singing Verizons
praises for grants it has given, to the Brooklyn Academy of Music and other programs. Very
little was said about the impact on consumers or competition of these telecommunications
mega-mergers. It was similar, in this way, to public hearings on bank mergers, held by the
Federal Reserve and, here, the New York Banking Department. But even at these, some of the
testimony is about the merger, or the companies record.At least for the portion attended by ICP, it was
sing-for-supper from Verizon...

STATEMENT OPPOSING THE
PENDING PROPOSALS OF VERIZON AND MCI (AND OF SBC AND AT&T) TO MERGE, July 26, 2005

Good afternoon.This is testimony on behalf of Inner City Press /
Community on the Move (ICP).While our
organization is usually more active in raising consumer protection issues in connection
with the mergers of banks, we also have concerns about telecommunications mergers such as
those currently proposed.In fact, ICP was
among those who publicly questioned WorldComs acquisition of MCI in 1998 (as well as
opposing, including to the NYS Public Service Commission, WorldCom MCIs application
in 2000 to acquire Sprint). ICP has also previously commented on applications by AT&T
(to acquire Teleport) and SBC (to acquire SNET in Connecticut). See, e.g., Reuters newswire of January 5, 1998,
"Groups Oppose WorldCom, MCI Deal,"
and Communications Today, May 7, 1998, "SBC, SNET Defend Merger to FCC."

Our organization
is opposed to both of these proposed mergers.As
noted in the PSC staffs white paper, the Verizon - MCI proposal stands to have a
more direct impact on competition in New York State, at least as measured by the HHI
Index.But there are issues on AT&T / SBC,
as well, that must be addressed.Our
organization, based in the South Bronx and active in similar areas, sees redlining by
banks and insurance companies followed by electronic redlining, the so-called digital
divide.The record of the two applicants,
Verizon and SBC, is problematic in this regard.

Take for example
Verizon, already accused of electronic redlining. See,
e.g., Verizon's target area for service questioned, Boston Globe of
February 9, 2005:

Verizon Communications Inc.
yesterday added four more overwhelmingly white, mostly well-off Boston suburbs to the
Massachusetts communities where it is deploying an advanced fiber-optic network that can
deliver cable television.... Affluent Wellesley and Westwood, along with more middle-class
Canton and Dedham, bring to 24 the number of Boston-area suburbs where Verizon has
confirmed it is building its so-called FiOS service. Of the 24, three-quarters rank among
the 50 wealthiest Bay State cities and towns, according to the 2000 US Census. In 17 of
the 24 communities, non-Latino whites make up 90 percent or more of the population,
compared to an overall state average of 82 percent, Census data also show. In contrast,
Verizon has yet to reveal plans to install FiOS service in Boston neighborhoods. Verizon
spokesman Jack Hoey said ... the work is easier in suburbs than cities because virtually
all construction happens overhead, without the need to pull cables from underground or dig
up streets. "We can move a lot faster on the poles than we can underground,"
Hoey said. Also, Verizon is still working out ways to feasibly install fiber-optic
connections inside apartments and multi-tenant dwellings, which are much more common in
cities than in suburbs that have mostly single-family and two-family homes. But Verizon is
also deliberately beginning to market services where it sees the best chance to make
money. "It's really a combination of two things," Hoey said. "One is on the
demand side. Where are there good markets? The other is efficiency and the cost of
deploying," which generally is lower in the suburbs, Hoey added... Elsewhere in the
country, who gets next-generation service, and when, sometimes gets controversial. SBC
Communications Inc. has been denounced for "digital discrimination" in video
rollouts...

Despite this record, Verizon is among those problematizing the
proposals by cities like Philadelphia to bridge the digital divide by providing free WiFi
services.The Financial Times has quoted
Verizon spokesman Eric Rabe that broadband networks are too complex for a city with
no experience in this field. It is a complex system that requires periodic upgrades.FT of June 3, 2005, High-speed internet
access for all? Not so fast.

Similar issues have arisen in Chicago,
regarding SBC and its so-called Lightspeed services. SBCs response was
to point to, as at todays hearing, its charitable contributions. But thats not
the issue. The issues including other telecom services, and including SBC.See, e.g., National Journals Technology Daily
of May 18, 2005, regarding Congressional questioning of both companies for

bypassing low-income and inner-city
neighborhoods in their initial rollouts of new television and high-speed broadband
offerings that will compete head-on with cable-delivered services... SBC also was
criticized for an investor relations presentation to Wall Street that said the company
would initially focus on high value customers.

These issues
must be addressed.Several of the applicants
here have troubling managerial issues, including related to discrimination. See, e.g., NY
Daily News of April 18, 2005, VERIZON IGNORED HER HARASS CLAIM, regarding a
lawsuit by a woman employed laying fiberoptic cable in the Bronx for Verizon's
Empire City Subway subsidiary. Regarding MCI, see,
e.g., Pacific Daily News of December 21, 2004, Terminations related to race.

A
combination of Verizon and MCI would harm consumers by reducing competition, including in
New York.

July 13, 2000: Finally, WorldCom and Sprint have called off their
anticompetitive merger (see the comments ICP filed with the FCC, below). You
may wish to visit the following "Stop
WorldCom-Sprint" site....

February 22, 2000

On February 17, ICP filed with the FCC a petition to deny the MCI WorldCom
- Sprint merger application ICPs protest focuses on the anticompetitive
effects the proposed merger would have on the long-distance and Internet backbone product
markets. ICP has also urged the FCC to consider how the companies and their merger affect
the digital divide. A summary follows.

Internet backbone: With one-third of all Internet Service Provider connections,
MCI WorldCom is far-and-away the largest provide of Internet backbone services in the
United States. Sprint is second-largest, with a 10% market share. By one estimate, the
combined companies would be as largest as the next eleven Internet backbone providers
combined. See Backbone Market Share, Boardwatch Magazines Directory of ISPs
(11th ed. 1999).

When Worldcom acquired MCI in 1998, Sprint, a Joint Petitioner here, urged
the FCC to require as a condition of the WorldCom/MCI merger, that the merging
parties spin off either WorldComs or MCIs Internet assets.
(Sprints Comments to FCC, March 13, 1998; see also Sprints press release of
March 4, 1998).

On December 15, 1999, the FCC asked Worldcom for more information on how
the proposed merger would affect the Internet backbone market, since (as here),
Worldcoms application included virtually no information on this issue. The FCC's
required public interest review must include this issue, on which the current record is
woefully inadequate. Worldcoms CEO on January 12 said that the wireless thing
is not the only thing we wanted. It was a primary component. But, if we had to sell off
the rest, the tax problem -- from any accounting perspective -- would be much more than we
could live with. Radio Comm. Report, Jan. 17, 2000. Observers have interpreted this
as indicative of Worldcoms position that it would refuse to make divestitures in
this case. Id. In that event, the merger should be denied.

Long-Distance: MCI WorldCom is currently #2, and Sprint is #3, in the
long-distance product market. The companies own application to the NYS PSC recites
that Worldcoms share of the national long distance market is 25.6%, and that
Sprints share is 10.5%. Significantly, the New York market is even more highly
concentrated than the nationwide market, with the top three players
controlling over 84% of the market. Allowing two of these three players to combine would
injure competition, and consumers.

The FCC's Chairman issued a statement, on October 5, 1999, that:

Competition has produced a price war in the long distance market. This merger appears
to be a surrender. How can this be good for consumers? This parties will bear a heavy
burden to show how consumers would be better off.

Nothing since October 5, 1999 -- least of all the Application, and the
Joint Applicants public statements, some of which are recited infra -- has changed
the injury to competition, and to consumers, that this proposal portends. As noted by one
informed observer, [r]educing the number of... players in long-distance cannot be
cured by a[ny] divestiture of assets. Telephony, December 20, 1999.

Digital Divide: As MCI WorldCom and Sprint have built-out their fiber optic
networks, they have avoided communities of color -- ICP, along with other groups, raised
this during the PSCs and FCCs review of the WorldCom - MCI merger in 1998. At
that time, WorldCom represented to the FCC that low-income and minority communities
located in and around these city centers are well positioned to receive the benefits of
local competition from MCI WorldCom. MCI and WorldCom are eager to expand their combined
networks and provide service to residences and businesses at all socioeconomic
levels. (Second Joint Reply of WorldCom, Inc. and MCI Communications Corp., FCC
Docket No. 97-211, at 93, filed March 20, 1998). It does not appear that these
benefits have arrived, since the MCI WorldCom merger; ICP has asked the FCC to
allow it to take discovery on this issue, and to hold an evidentiary hearing.

Earlier, on February 4, ICP filed a timely protest to
MCI WorldComs application to acquire Sprint, to the New York State Public Service
Commission. The NYS PSC confirmed receipt of ICPs protest on February
4. This will be updated as circumstances warrant.

Under the First Amendment to the U.S.
Constitution, we have freedom of the press, and of communications -- but only if you
can afford them. These are issues that low income communities can and should work on. ICP
is trying, in (for now) these three fields: broadcast (radio and television);
telephone; and the Internet (opposing electronic redlining, see below).

Broadcast: Until the Reagan administration, U.S. law had the
fairness doctrine, that mandated that different points of view be heard. After
this doctrines elimination, there remain only weak encouragements for public
service by broadcasters, and fair employment requirements that are now also under
attack.

TV and radio stations are re-licensed by the Federal Communications Commission every eight years. At
that time, the public can comment, on whether or not the stations (which are given
monopolies for the particular frequencies at which they broadcast) are serving the public
interest, and are fair in their employment practices. These requirements are also
considered when broadcast companies apply to merge or expand.

In 1997, ICP challenged Chancellor Broadcastings applications to
acquire radio stations from Viacom, based on the stations presumptively
discriminatory employment practices, and the monopoly they would have in radio in and
around New York. After months of responses and replies, the companies settled with ICP,
making commitments to improve their employment practices, air public service announcements
about issue of concern in the South Bronx and Harlem, and to offer reduced rate
advertising to small businesses in these areas, to off-set their anticompetitive control
of this market. Here's a link to an FCC Order
reciting some of this; see also, Reuters newswire of March 28, 1997, "Consumer
Group Withdraws Evergreen Protest;" Dallas Morning News, May 29, 1997, at 2D,
"Area Firms to Expand Minority Efforts;" and New York Daily News,
May 29, 1997, "Complaints Heard."

ICP is looking closely at other broadcast companies, and would happily
speak and work with grassroots communities interested in doing the same.

Telecommunications: The cusp of the millennium has seen a spate of
telecommunications mergers: Bell Atlantic and NYNEX, SBC and PacTel and Ameritech,
WorldCom and MCI, AT&T and Teleport. These mergers raise consumer issues as to both
telephone and Internet access and pricing. WorldCom and MCI, whose merger ICP and others,
including the Communications Workers of America and the Rainbow Coalition, protested, were
required to sell off part of their Internet backbone holdings. Here's a link to a New York State Public Service
Commission Order in the midst of this battle. See also, Reuters newswire
of January 5, 1998, "Groups Oppose WorldCom, MCI Deal," and
Communications Today, May 7, 1998, "SBC, SNET Defend Merger to FCC."

Bell Atlantic and SBC are periodically required to open their markets to
competition, but do so only half-heartedly. Perhaps most important for the future, the
independent, high tech companies like Teleport, who are running high speed communication
wire networks and then selling out to the Baby Bells, have been excluding low income and
minority neighborhoods with this new technology.

Internet / Electronic Redlining: The concept of electronic
redlining is coming to the fore, but decisions as to the new systems are being made
before any legal protections are put in place. This is an issue that ICP has raised
repeatedly to the FCC and certain state communications regulators. For now, the only
protection these agencies cite is the loose concept of universal service, and
the new federal E-Fund. Universal service is the concept under which most of
the country was wired for telephone. Telephone was (correctly) viewed as something of a
necessity, and so the Bells were prohibited from charging excessive fees in rural and
other high cost areas. Now, for the Internet, the federal government has proposed
subsidizing rates, to public libraries, schools, and health facilities. The telecom
companies dont want to pay for this; the Republicans in Congress are attacking both
the idea, and the agency formed to implement it.

A good source of information on these E-Fund, universal service and other
telecommunications issue is the Benton Foundation, which puts out a daily e-mail summary.
Contact them at http://www.benton.org/.

In April 1999, MCI-Worldcom was sued for not allowing the use of calling
cards to make long distance calls in South Central Los Angeles and other communities of
color, purportedly because of the greater existence of fraud in these
communities. Darren Haylock, visiting his parents in South Central, tried to call
relatives in Belize using his MCI calling card. His call was blocked; the operator told
him it was because he was calling from an area with a high level of fraud.
When Mr. Haylock later called from the suburban San Fernando Valley, his call went through
without problem. His class action lawsuit followed. MCI-Worldcom refuses to list the areas
it blocks calls from. This will be updated as the lawsuit proceeds.

May 10, 1999 -- The Senate Judiciary antitrust subcommittee, doing the bidding
of the ever-larger telecom conglomerates, on May 6 unanimously approved a bill imposing
time limits on the Federal Communications Commissions review of mergers.
Subcommittee chairman Mike Dewine, Republican of Ohio, said the FCC is taking too
long to review mergers. [Businesses] need certainty so that they can carry out their
long-term strategies. What Sen. Dewine apparently meant is that the FCC is taking
too long to APPROVE mergers. The certainty that the monopolizing applicants
want is for approval; and that is the message that the Senate is sending to the FCC.

The irony is that the FCC usually waits for the Department of Justice to
act, and thereby can use the information collected and developed by the DOJ. If the FCC
must act faster, it will have to do its own detailed inquiry into the competitive effects
of mergers, possibly creating more burdens on applicants. The FCC is required to consider
more than antitrust -- it must rule on a broader public interest standard.
While the FCC has approved virtually all mergers, it appears that the Republicans are
moving toward stripping the FCC of its public interest jurisdiction. Public
interest be damned -- businesses need certainty. The bill now passed to the
full Senate Judiciary Committee, and then to the Senate floor. If the Senate Republicans
actions on S. 900, the financial modernization bill that rolls back the Community
Reinvestment Act, is any guide, this pro-monopoly bill will glide through the Senate, with
the Democrats capitulating as well. Ma Bell, fuse once against with your children, without
any restrictions on pricing. Developing...

* * *

April 19, 1999 -- Senators McCain (R-AZ), Hollings (D-SC), Rockefeller
(D-WV) and Burns (R-MT) have stated they will push for legislation directing federal
regulators to determine whether people living in rural and poor urban areas fall victim to
electronic redlining when cable and telephone companies deploy high-speed Internet
service. See Hollywood Reporter of April 14, 1999.

For an existing model to combat the roots of electronic redlining, visit
the Community Technology Center - Net, at <http://www.ctcnet.org>.